New car market slumps to 23-year low as chip shortage throttles sales
Semiconductor supply issues continue to batter industry with warnings problems will continue into next year
The UK’s new car market slumped to its weakest September in more than two decades, with registrations down almost 35% in what is traditionally a bumper month for dealerships.
The latest data from industry body representing car makers and retailers show that September 2021 was the worst month for new registrations since 1998, before the two-plate system was introduced.
Just 214,312 new cars were registered in what is traditionally the second-busiest month for the market, down 34.4% on September 2020 when dealerships were just beginning to recover from lockdown, and down nearly 45% on the 10-year pre-pandemic average.
The poor performance has been blamed on the ongoing semiconductor shortage, which experts said was “crippling” the automotive industry. Some manufacturers are now quoting waiting times of up to a year for certain models as they struggle to secure components.
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Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT) which compiled the data, called the figures “desperately disappointing”.
He said: “Despite strong demand for new vehicles over the summer, three successive months have been hit by stalled supply due to reduced semiconductor availability.”
Industry experts said the problems in the new car market were having a knock-on effect on used cars and was likely to continue for months.
Jim Holder, editorial director of What Car?, said that the impact of the parts shortage was likely to continue until at least mid-2022.
He commented: “September plate-change is normally a peak sales month for the industry, yet this year’s results demonstrate the crippling impact the ongoing microchip shortage has on the sector.
“Manufacturers are struggling to meet demand, with some admitting waiting times for certain models have been pushed to beyond a year. For buyers, this means longer waiting times on new cars than many are willing to accept.
“This year, we’ve seen nearly a third of used car buyers admit they were originally in the market for a new car, but switched to the used sector in search for better deals and vehicle availability. In turn, this demand has squeezed supply, and pushed prices up, sometimes dramatically.”
Electric cars continued to be a small bright spot in the market, with registrations up nearly 50% compared with September 2020. More than 32,700 new EVs were registered, meaning they now account for 15% of the new car market.
Karen Hilton, chief commercial officer at online retailer heycar, said that the current fuel crisis appeared to have furthered people’s interest in switching to an EV.
She commented: “The scenes of panic-buying, punch-ups at the pumps and queues snaking for miles have had a galvanising effect on car-buyers - prompting an unprecedented surge in interest in EVs and hybrid vehicles.
“At the height of the fuel shortage, between 20 and 27 September leads for electric cars on heycar were up 159% year-on-year.
“On the weekend when shortages were most critical - 24-26 September - the number of heycar visitors browsing electric vehicle listings was nearly double the year before - up 94%.
“It suggests that it is convenience rather than environmental concerns that could push more people towards EVs.”